UPS to Leave New England Pension Fund

Barry B. Burr
Pensions & Investments
August 27, 2012

United Parcel Service Inc., Atlanta, expects to pay $1.2 billion in withdrawal liability from the $2.6 billion New England Teamsters & Trucking Industry Pension Fund, according to a UPS statement.

UPS and pension fund officials also agreed to create a new structure for future benefit accruals for the multiemployer pension fund in which all employers will be liable for only their own employees' pension benefits. Under the current multiemployer structure, contributions made by UPS "support pensions of people who never worked at UPS," said Norman Black, UPS spokesman.

UPS' withdrawal, effective Sept. 16, is pending approval of local unions representing the 10,200 UPS employees who participate in the Burlington, Mass.-based pension fund.

Under the agreement, UPS plans to pay the withdrawal liability in annual $43 million installments over 50 years, Mr. Black said. In the current quarter, ending Sept. 30, UPS plans to take a charge of $896 million for the present value of its total withdrawal liability from the original pension plan structure.

Also, in the new structure, UPS' "liability is only what is in our contract" with its employees who belong to the New England Teamsters fund, Mr. Black said.

The UPS statement said the new "structure is designed to allow employers to assume responsibility only for their own employees' (future accrual of benefits) without regard to any previous fund liabilities."

"UPS' goal when considering any change to participation in a multiemployer pension plan is to safeguard the pensions earned by our employees in a cost-effective manner," John McDevitt, UPS senior vice president of human resources and labor relations, said in the statement. "This transfer will remove uncertainty associated with this plan for our people while being fair to the company and our investors."

"Clearly, it's cost-effective," Mr. Black said of the new structure.

UPS has a representative on the six-member board of trustees, who was recused from the project to develop the new structure, Mr. Black said in an e-mail.

Mr. Black had no estimate of the expected size of the new pool of assets.

The New England Teamsters pension fund, which has $6.2 billion in liabilities, has been in critical status, or the red zone, as defined by the Pensions Protection Act of 2006 as less than 65% funded, according to the fund's 2011 5500 form, filed with the Labor Department's Employee Benefit Security Administration.

"In addition, UPS and NETTI have agreed to a contribution rate for future accruals designed to ensure UPS employees do not see a reduction in their pension benefits, and the company will not be required to increase cash contributions for 10 years," the statement said.

Charles Langone, pension fund manager, couldn't be reached for comment.

Comments

I Hope the men & women, spares, casual and list people stop and think before giving into company plan. For as they should know, when and if a layoff comes or someone gets fired, none of the hrs from the company plan will count into the teamsters plan, and that alone will not give them all pension hrs needed in as they left the netpf. too bad so sad. but they should remember the netfp fund hrs count no matter where you work. Once UPS gets control you're all under the bus. Already telling you no raises for 10 years. hello, don't trust the company.

One thing to note is that this proposal is for us to still be in the NETTIPF, just in a new section that keeps company liability down. Our accruals from the old section still count towards the overall pension benefit, which is not decreasing. Our accruals have been frozen for 7 years as it is, with no timeframe for an increase, since the fund is in critical status. UPS won't have control, the Fund trustees do, although UPS has a trustee (they have for a while now). There are some red flags but there are many positives to this move, and the members are voting to decide our future.

During our regular membership meeting I asked the Sec/Tre about the pension.

He claimed this will be good for all members within the current fund. I again asked, "How can loosing the largest employer within our Multi-employer fund be good for the stability of the fund?" he just said it was in our best interest and if was going to vote in favor of it.

Second point, was he stated that there will be no further pension contributions for any part-timers.  He stated this explaining it was something the company wanted to do and the fund trustees allowed it to happened.

I will be attending the pension review meeting on Sunday 9/16!

 

Has anyone attended a meeting yer to get some answers?